Industry POV

Fill their wallets

01 Feb 2017

The fastest growing ad industry in the world is staggering to keep up with its pace, lately. Industry experts believe that demonetization has impacted advertising revenues by Rs 1,200-1,500 crore in the third quarter of current fiscal. This has got ad makers and marketers staring at Budget 2017 and what it has to offer.

“The branding and marketing sector essentially depends on growth of businesses to make any significant strides. Unfortunately, it is also the first to be impacted by surgical strikes like demonetization, and spends on advertising, promotion, new launches are all put off by companies,” says N Chandramouli, CEO, TRA Research.

“Firstly, a significant cut in corporate as well as individual income tax will come as an immediate relief. Secondly, the ease of doing business must be bettered with difficult statutory human resource compliances being made single window and also made easier,” he adds.

The primary objective of the Union Budget 2017 should address the depressed buying confidence that consumers currently have.

iProspect India says Rubeena Singh says, “I’m expecting the advertising sector to leverage the unique opportunities demonetization has paved for specific industries such as Banking, Financial services and Insurance (BFSI), in terms of ad spends. Also, this budget will hopefully leave more money in the hands of the consumer required to spur demand, that appears to have slowed down post demonetization.”

Meanwhile, Rajiv Dingra, founder and CEO, WATConsult, has hopes pinned on the Goods and Services Tax (GST) regime. “I wish there was simplification of service tax because right now when you buy in India, you pay service tax right in the next month. If you buy Rs 30 crore worth of media, you have to pay a huge sum in taxes. If there is a GST which solves it or something else that solves it, that needs to implemented immediately.”

Also, with Digital India actually happening, “abolishing service tax from Digital India buys would be great,” he said, adding, “That is not the intention of the government given that it is taxing Google and Facebook.” Though, he believes, it will help smaller start-ups grow. “Where do smaller start-ups advertise, they do it on digital platforms. So, if they can pay 12-13% lesser, it will help them, and that is how they grow their business while you tax Facebook and Google,save smaller agencies from paying taxes on digital.”

“Moreover, to achieve the goal of financial inclusion, the government should also rationalise indirect taxes and charges levied with respect to digital payment transactions, and further incentivise companies operating within this space. To adapt to the need of time, the government should also rationalise provisions related to employee tax benefits such that payments/documents in the digital medium are treated at par with physical instruments.”